voestalpine reports impact of economic meltdown
June 8, 2020
Austria’s voestalpine Group has reported that both revenue and earnings in its business year 2019/20 have been impacted by ‘economic meltdown’, non-recurring effects and the economic consequences of the COVID-19 pandemic.
The group reported a year-over-year decline in revenue of 6.2%, from €13.6 billion to €12.7 billion, with profit from operations (EBIT) falling to €-89 million (previous year: €779 million) due to impairment losses. Profit before tax dropped from €646 million to €-230 million, and profit after tax from €459 million to €-216 million.
The business year 2019/20 was said to be defined by a massive dampening of sentiment in the economic environment, owing to worldwide trade conflicts. These developments hit Europe’s export-driven industry, which accounts for about two-thirds of the group’s revenue, particularly hard.
The automotive segment, which is important to the voestalpine Group, slumped worldwide. Add to that globally rising iron ore prices in the face of simultaneously falling steel prices, and an upward trend did not make itself felt until the start of the business year’s fourth quarter, stated the company, only to be brought to a sudden standstill by the outbreak of the COVID-19 pandemic.
“The decline in the voestalpine Group’s revenue for the business year 2019/20 reflects the economic downturn on the whole throughout the business year. But negative non-recurring effects also had an impact on the results. Given the intensifying deterioration in the economic environment on account of COVID-19, we will consistently pursue current programs that are aimed at cutting costs and boosting efficiency,” stated Herbert Eibensteiner, Chairman of the Management Board of voestalpine AG.
The COVID-19 pandemic and its economic consequences forced voestalpine to curtail production and temporarily shut down plants in almost all of its areas; this included a small blast furnace in Linz, Austria, that has been shut down until further notice. In May 2020, about 10,400 employees in Austria and about 3,000 employees in Germany were registered for short time work, and another 2,400 employees internationally for similar schemes.
Due to the uncertainties confronting the entire voestalpine Group in the next few months, it was added that an assessment of future earnings can only be a rough estimate. “Given the continued volatility of the economic environment, we expect the voestalpine Group to generate EBITDA of between EUR 600 million and EUR one billion in the business year 2020/21,” concluded Eibensteiner.
www.voestalpine.com
